The Mexican government is stressing the benefits of the U.S.-Mexico-Canada Agreement to the United States amid President-elect Donald Trump’s tariff threats and preparations for the trade deal's forthcoming review – in which market access for U.S. agriculture could feature prominently.
“We want to work with Canada and the United States to have a very good commercial agreement for all the region,” Mexican Deputy Secretary for International Trade Luis Rosendo Gutiérrez Romano told Agri-Pulse.
Gutiérrez, who joined Mexican President Claudia Sheinbaum’s administration in October, was in Washington last week for meetings with officials, industry representatives and lawmakers a week after Trump threatened to slap 25% tariffs on imports from Mexico and Canada over concerns that neither was doing enough to stem the flow of illegal migrants and drugs across the border.
The threat of new tariffs prompted discussions between Trump and the Canadian and Mexican leaders on immigration and drug policy, but analysts also told Agri-Pulse that the threats could also feature as part of USMCA renewal discussions in the coming years and be used to extract additional market access for U.S. agriculture products like dairy products and corn.
Both Mexican and Canadian officials have expressed an interest in preserving the free trade agreement. During his visit, Gutiérrez told industry representatives at an event hosted by the U.S.-Mexico Chamber of Commerce that Sheinbaum is focused on protecting the trade agreement and committed to working with the U.S. to strengthen the region’s economic security.
“In the last three days, I have been observing a great interest of so many companies that want to protect our free trade agreement,” Gutiérrez said during the event.
Are tariffs USMCA-compatible?
If Trump pushes ahead with his tariff threats – which, analysts say, is a big if – the new duties would have a significant impact on cross-border trade with the U.S.’s closest trading partners. Accordingly, the USMCA could emerge as a venue for tariff disputes, analysts told Agri-Pulse, and any trade conflict would hang over the pact’s review process slated for 2026.
Trump negotiated the USMCA during his first term to replace the North America Free Trade Agreement, which had been in place since the early 1990s. The deal established new terms for duty-free trade between the North American partners and prohibited imposition of tariffs outside of the specific carve-outs negotiated into the agreement, or for “essential security” purposes.
If Trump were to impose broad tariffs affecting all Canadian and Mexican exports as he has threatened, Mexico and Canada could challenge the tariffs via the USMCA’s dispute resolution mechanism, said Andrew McAllister, a partner at Holland and Knight’s International Trade Group.
“This is exactly what USMCA was designed to govern, and so I think there is potentially some basis to say, ‘this is too broad and does not use a scalpel approach to something that protects your security interests,’” McAllister said.
The USMCA dispute settlement system cannot direct Trump to remove the tariffs, a former Office of the U.S. Trade Representative official pointed out to Agri-Pulse, but it would allow Canada and Mexico to impose retaliatory tariffs of their own under the agreement to offset their harm.
Former Mexican Secretary of the Economy Ildefonso Guajardo Villarreal was blunter in his assessment of the compatibility of Trump’s tariff threats with the USMCA.
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“If President Trump acts on his threat to impose tariffs, that will be a violation of his own agreement,” Guajardo, who represented Mexico during USMCA negotiations, said during a USMCOC panel discussion on Thursday. “And if he does not respect his commitments, which world leader is going to trust him in future negotiations?... Even if you're going to be radical in negotiations, you have to be trustworthy.”
Former Mexican Secretary of the Economy Ildefonso Guajardo Villarreal.Gearing up for a 2026 review
Several of Trump’s incoming cabinet picks have emphasized the potential for using tariff threats as leverage in market access negotiations, including Howard Lutnick, Trump’s pick to head the Commerce Department.
McAllister suggested that Trump’s specific threats on Mexico and Canada could be part of an effort to secure concessions from the two governments during the forthcoming USMCA review, including those related to U.S. corn and dairy exports.
“Those market access issues, those are going to be key,” said McAllister.
The USMCA includes a novel provision that requires a joint review after six years, at which point all three parties must agree to renew the deal to extend it by another 16 years. If the parties do not agree to an extension in 2026, the three governments will hold joint reviews annually to try to secure an agreement before the deal expires in 2036.
Trump described the mechanism during the campaign as a “renegotiation” provision. Senior officials from Canada and Mexico, however, have stressed it is a “review,” not a renegotiation.
The tariff threats, McAllister said, would allow the Trump administration to go into the review in 2026 “primed and positioned to impose tariffs” unless the Mexican and Canadian governments extend more favorable terms for U.S. exporters, particularly those in the agricultural sector.
The Trump administration will “want to make sure that our U.S. companies have a level playing field when it comes to agricultural exports.” McAllister said. Accordingly, he predicted that the North American corn and dairy sectors would feature prominently in review discussions.
Andrew McAllister, a partner at Holland and Knight’s International Trade Group.
Access to Canada’s dairy market and the way it administers its tariff-rate quota system has been the subject of persistent gripes from U.S. dairy interests, which argue that Canada’s exclusion of dairy retailers, food service operators and other entities from qualifying for lower dairy product tariffs violates its USMCA market access commitments. A second USMCA dispute settlement panel ruled against the U.S. complaint in November. There is no appeal mechanism.
A dispute settlement report in a U.S-initiated case against Mexico over its import restrictions on genetically modified corn is expected later this month.
As part of the 2026 review, McAllister said, the U.S. is likely to push for change in Canada’s dairy market and Mexico’s corn market, “either legally, or in practice, or policy for agricultural exports.”
The former USTR official agreed that corn would likely be part of the review discussions, as well as automobiles' rules of origin, the volumes of steel arriving from Mexico, and Canada’s digital service tax, which was the subject of dispute settlement consultations launched this year.
“The Trump administration may also just be looking at the trade balance with Mexico and talking to them about the bigger picture in the trade relationship, and whether there are ways to address that,” the former official said.
The dragon in the room
China will also loom large in the background of the UMSCA review, analysts said. Concerns in Washington abound over Chinese investment in Mexico and efforts from Chinese multinationals to establish factories in northern Mexico to send manufactured goods to the U.S. market.
While the investment volume remains small – China accounted for less than 2% of inbound investment to Mexico, according to the Milken Institute – it is growing and has drawn attention of some in Congress who want to prevent Chinese companies from benefitting from USMCA perks.
“We have to be very clear, what is at the bottom of President Trump and his new administration is going to be the role of China in North America,” Guajardo said at Thursday’s panel discussion, arguing that Mexico needs to determine what kind of Chinese investments it will allow.
The U.S. and Mexico signed a memorandum of intent last year to cooperate on investment screening. Gutiérrez has met with Assistant Secretary of the Treasury for Investment Security Paul Rosen, insisting at the USMCOC event, “we're working hard on this agenda.”
On the U.S. side, McAllister said the Trump administration could use the USMCA review to curb Chinese companies’ ability to use strategic investments in Mexico to secure duty-free access to the U.S. market.
“The administration is going to be creatively looking for other mechanisms – other positions – to say, ‘Okay, well, this is why a particular product made in Mexico should not qualify for USMCA or should be subject to some kind of additional national security duty based on either raw inputs coming from China, the guts of the item coming from China,” McAllister said.
Ultimately, the analysts with whom Agri-Pulse spoke believed that the USMCA would eventually be renewed, even if the review drags on beyond 2026.
“It is likely to go multiple years because there are these big issues in the trade relationship,” the former USTR official said. But they said that Trump’s recent actions, including the latest tariff threats, suggested his administration would begin working with Mexico and Canada on the agreement at the earliest opportunity.
“The Trump administration isn't necessarily going to wait for that review period to be triggered in 2026 to open up a conversation,” they said.
The decades-long history of the North American free trade relationship also could spur the parties towards an agreement, McAllister said.
“The tailwinds of keeping the agreement intact, I think are ultimately going to prevail,” he added.
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